welcome to "worldwide exchange." i'm kelly evans. ross is away. these are your headlines from

around the world. president obama and congress return to work today with little progress seen on a deal to avoid the fiscal cliff as the government starts taking steps to buy more time before the u.s. hits the debt ceiling. the yen hits a two-year low against the dollar as the new japanese government battles to weaken currency. exports are rising, pushing the nikkei to its strongest gain in 20 years. .shares of toyota are heading higher after the u.s. settled a class action lawsuit. the $1 billion payment is already priced in. okay. welcome to "worldwide exchange." plenty of news to watch out of washington. all of this week, we thought it would be a quiet one. but i won't be inside the beltway if they want to get something done.

the u.s. will hit the $16.4 trillion debt ceiling come monday. in a letter to congressional leaders, geithner says treasury will begin taking steps to save the government about $2 billion. geithner says it's harder to predict a time frame because the ongone fiscal cliff talks make it difficult to forecast next year's budget. among the measures treasury will take including suspending state and local government securities and investments in the federal employee pension funds. those don't sound like good practices going forward. president obama meanwhile arrives back in washington after cutting short his christmas vacation in hawaii. congress is back in town, but little progress was made over the holiday to avoid the fiscal cliff and no talks have been set. the senate is due in session today, but the house has no plans to reconvene. last week, house speaker john boehner said it was up to the

house to act on extending unemployment benefits. as we work through all of this, we are happy to be joined by allen capper, head of credit strategy at lloyd's for the hour. welcome back. i guess we're still shaking off the christmas turkey tryptophan, i guess they call it, and yet it feels as though it's groundhog's day. >> yes. you say shaking off the christmas blues and we're shaking still waiting to hear what happened with this fiscal cliff. we knew they would take it to the wire. there's no surprises. what concerns me, this may stretch on until january. now, this is not the first time we've been in a situation like this in my career in the markets. the opportunity is clearly markets may sell off and then an accord has to be reached. i guess a lot of people will be seeing that. >> what are you seeing in credit markets right now?

is there a sense they're looking at the strong off move? >> i think in the credit market, liquidity started to disappear last week and now there's no real positioning we can do. so i guess you kind of go into next year married to what you've got. so it's kind of going to be a struggle. i guess you'll see spreads widing in the first part of year if they don't reach an agreement and then that is a buying opportunity. >> what is interesting, we look to be finishing the year on such a positive note generally speaking relative to where we came in. you would expect if there was all this concern and uncertainty about what's looming on the other side of the calendar that that would start to get priced in. yes, we've started to see credit spreads widen, but it feels as though there's hope there will be an agreement here. >> i think we all went into this thinking there would be an agreement by the end of the year and worst case by the first week of next year. clearly, the worst case seems like the most likely outcome now and that has to get priced in.

the trouble is, to price it in now with so few people in the office, i don't think people will be able to position themselves as a result. so my best guess is, early next week, maybe straight off the new year. >> technically, what do you do from a positioning point of view? how do you play this especially with everything else you're considering in 2013? >> i think a lot depends on the time frame. if you have a three-month time horizon, the sell-off won't last long, therefore, my sis, stay long, stay positive. there's a lot of money to go into markets in the early part of the year. but i don't think that trend will continue through the first ter. there will be a rocky road possibly driven by news from italy in the latter part of february. so i'd be long now, but i would -- on that position. >> and we'll get into more of on that in just a minute. allen will stay with us. if you have any questions, send them in. worldwide@cnbc.com. if you want to share your

thoughts, say hello here on this quiet christmas week. we would appreciate that, too. a ja toyota has agreed to settle a class action lawsuit. customers brought the case against toyota claiming certain models accelerated unintentionally. 16 million vehicles will be covered by this action. it includes the camry and corolla. the nikkei generally speaking was higher this morning. the season of good will seems to have tech firms bye. this amid claims that ericsson breached a number of samsung patents. now let's check in on markets. it's time to look at the heat map. and we have green, more green than red on the board today.

by three to two, gainers outpacing losers. now, europe was closed yesterday. there was trading in the u.s. it was a weaker session. that move did extend to some parts of asia overnight. interestingly enough, the shanghai composite down .6%. the hang seng was higher on the day. the nikkei adding .9%. the kospi was up even though south korea growth projections were lowered. european markets as we look across the major bourses give you a sense of the action we're seeing in the xetra dax which is about to have its best year in seven years, something like that. the ibex 35 is rallying as we get a further sense of how little value bon can i a has. the ftse mib is moving higher, too, adding about .1%. take a quick look at the bond space, the yield for spain and italy is moving higher today.

but roughly as relevance we've seen predominating over the last couple of weeks. that is around 5.3% for spain. 4.5% for italy. we did see guilds moving about 3% level. now back below 1.9%. stick around because straight ahead, we get a view from one economist who says the weaker yen team is going to continue into the new year and offer some strategic calls.

as europeans get back to trading equities, let's get a sense of what we might see in the markets today. chris joins us from ibg group. chris, good morning. >> morning. >> we've seen a pretty quiet couple of days here. we've been talking about strength in the dax and whatnot. what's on your radar screen? >> as you say, it remains a fundamentally quiet day. unfortunately the fiscal cliff is dominating everything, really, what little traders are doing is being over-shadowed by the lack of movement, rather, in

washington. >> and we've just heard allen capper who is with us talking about more volatility in the first quarter. as it appears we're not going to get a resolution before the end of the year. what impact is that likely to have on european trade? >> i think we've seen a lot of confidence across the board. markets have been sort of very blazej about this through december. now it's looking as if we're not going to get that. investors will take money off the table and move into the safe haven. >> now, you said investors taking money off the table. second of january, that's probably going to be their first opportunity to do that. if they don't reach an agreement, how significant a move should we expect? >> of course, it's very difficult to tell given the quiet trading we've had the last few weeks. we've dominated the markets in that sense. dence effect from rip, drip, january 2nd on wards and moving through the market as a whole is

more important to keep an eye on. >> we're looking through some names, unilever weighing on the market today. specific, is there a sense of sector differentiation? what seems to be driving today's gainers and losers? >> it really is a case, we're seeing the miners and banks once again they saw on christmas eve showing some gains there. although i think we wouldn't want to attribute too much strength to that. taking a bit of a hit, perhaps worrying about the effect on consumer spending in the new year. >> talk about the new year. we've talked about the fiscal cliff. obviously how the crisis plays out is going to be a key theme. what are your favorite positions? >> i think we can see a degree of confidence in things with the markets moving again. east asia remains a key area. companies with a focus on that area will be the ones to look out for. >> one of the key things which people keep focusing upon is the possibility for the equity

markets to rally, in part because money comes out of fixed income. that could be quite a major trend in 2013. do you think that's realistic? >> i think it is realistic. i think we've seen a lot of risk on-risk off in the last two years. i think stock picking could return in 2013 been it's an absent from markets for too long now. i think it's time to invest, be more discerning and trying to find companies with reasonable term brands. diaji is one of those companies despite the hit it's taken in the last few days. >> chris beach yumm, market analyst at ig group, thank you very much. >> thank you. take a quick look at some live pictures here we're getting from president obama returning to washington. he cut short his vacation in hawaii in order to resume talks on the fiscal cliff. we're looking at pictures of him

in honolulu as he's boarding air force one. we're looking at whether congress will be back in session in order to reach a deal as the clock ticks towards that year-end deadline. the imf says france should give itself more leeway to meet mission targets. the company's 3% of gdp with more pressing -- than cussing excess from public finances. the imf has warned against more tax hikes warning these could further restrict growth. he says it's built a bit of momentum, but still needs to do more. >> france has to reform. france cannot -- that can avoid reforms. it can be again reforms which might be different. but we need to reform. let me say that from that

perspective, the recent decisions going the right direction and i think that the government has understood the need to help companies create jobs. so what is important is that this momentum is there going forward. i mean, the momentum, positive momentum regarding the negotiation between the trade unions and the corporate buddies to give more flexibility to the labor markets, to give the ability for corporates to adapt more quickly. it's very important that the government complies with reducing the budget deficit and reducing public spending. we have too high level of public spending. and if you reach the level of taxes is too high. so the strategy of the government should be going forward, again, to cap public spending, reduce taxes, to

create a favorable environment for corporate. and let me say that france has a lot of advantages. nice infrastructure, good infrastructure, demography, people with skills, a good level of education. we can take advantage of that, even compared with our peers so let's do everything we can to -- the benefit of these positive advantages and not be -- not present people to invest in france because they might be afraid of a lack of visibility on the taxpayers or too high taxes. >> but do you think it's sending the right signal to investors when it's threatening to nationalize a factory? >> no, certainly not. these are not the right ones and clearly what an investor needs is, again, confident. immediately going forward,

illustrate will not suffer from taxes or a potential threat. the message should be positive for investors, not just french one, but also we have a strategy to reduce stability. >> but do you understand some people could be forced to leave the country because of increasing back pressure? >> there is a lot of debate around that. my view is that is not the right thing to think that you can put people, like, in jail. it is important to be competitive by providing a favorable environment, something where people will want to stay, invest, create wealth, create

jobs. again, i would like to speak from that perspective, you went too far and the strategy going forward should be precisely -- to the essence on the public spending. >> the ceo there. coming up, we'll get another exclusive view from a french corporate leader. yes, we will hear from the ceo of publicis and find out why he thinks french people have a problem with money and success. now you're looking at live pictures of president obama as he prepares to board air force one in honolulu ahead of his return to washington. he did cut short that hawaiian vacation in order to resume talks on the fiscal cliff. moving on, the new japanese prime minister shinzo abe has promised to battle inflation. government spending will help make japanese exports more competitive. meanwhile, the bank of japan was

debating measures to -- joining us now, allen capper is with us around this table. when we talk about the yen, how important is this weakness? and do you expect this trade to be for 2013? >> i think this is probably the single most important thing the europeans ought to be watching. it's clear that the change in japanese policy, if by the time we get to q4 next year, you will see stronger japanese numbers, there would be a stronger temptation to carry out much more massive qe and fiscal stimulus. it's too early to say, but i think we need to watch japan carefully. >> currency wars is what ur use saying. >> absolutely. and i like his idea about fiscal stimulus through official use of the funds. it's a very interesting

strategy. >> ur r it seems to me the next level of this is you have to bloef the government can achieve this. how are they going to be able to shake off inflation? >> the key look is to acknowledge that inflation is not the problem. when you talk to investors good qe, they're concerned about the inflationary impact. my mind, i'm thinking we need to get the economies moving again. if that means inflation were to rise for two, three, or 4%, that is a lesser order risk than deflation. >> we've joined by vishnu. you just heard talking about the feasibility of giving to a 2% inflation target. what is it going to take in your view? how likely is it? and what is it going to mean in

the end? >> there will still be a challenge to achieve higher inflation, that is electricity tariffs and whatnot. core inflation is going to be pretty low. nonetheless, i think a first step, perhaps, is for the boj to signal they're going to take a lot more aggressive steps through the economy and that needs to be complemented by fiscal programs, especially structural programs that will revise the japanese economy. that is one reason why markets are reacting to what looks like a serious challenge undertake by shinzo abe. >> it's been an extraordinary rally for the last several weeks. when you look, for example, at the boj minutes, is that what you want to hear is this discussion of open ended asset purchases? or is there a different method that you would prefer to see?

>> i think the boj is in a delicate position. they have done quite a bit of asset purchases. and the boj is not entirely sure that all the answers lie with becoming more impressive. it has reservations about that. a lot more ought to be done. one of the challenges that the boj will face is relative movement, particularly if you're going to compare how quickly the boj balance price is increasing with the respect of, say, the fed balance sheet which is now about 3 1/2 times what it used to be at the beginning of 2007 whereas boj hasn't extended quite as fast. >> you mentioned the boj could

be in a digital situation. what i'm pondering is when you look at how much qe has taken place in japan compared to, for example, the uk, it's actually a relatively small amount. if japan tries a much larger qe event, surely we go down the route of the uk which in and of itself does not demonstrate a huge increase in inflation and a huge increase in market growth, either. >> arguably, that is one of the problems with the huge task that the boj has ahead of it. people progress in terms of growth, japan has bigger problems, much bigger problems in terms of the demographic in terms of the structural hold back. so there are a lot of sectors at play now. i think one of the names that

the boj has is whether this will work or not. but if were looking at it more from a yen perspective, certainly two things are going to drive the yen are going to be the relative price of the boj balance sheets with respect to, perhaps, the fed and the ecb and the other being the jgb. >> and briefly, in summary, what are your favorite strategic calls? >> the strategic calls for us are going to be buying the rupee against the yen. we are looking for the yen to depreciate further and keeping our fingers cross on some policy upside coming to india. the our one is further reversal of thein. we're looking for more strength in the one against the yen. >> that one is going to be a tongue twister for me next year.

vishnu, thanks very much. again, you're looking at pictures there live pictures of air force one. it is just about to take off in honolulu as president obama is set for his return to washington. maybe, allen, just maybe, some resolution of fiscal cliff talks about the end of the week? >> well, just maybe. the trouble is, they look pretty entrenched right now. i think for some ways for the market perspective, that's going to be what we want. but i would say we're beginning to price in the possibility. >> that it doesn't happen, yeah. continuing with the region, the south korean government is forecasting a mild recovery next year. the finance ministry has set a growth target of % for 2013. that compares to the bank's earlier projection of 3.2%. the central bank has now to continue supporting growth. both of these statements were pushing the won higher. you can see the dollar/won trazing down about 0.5% today.

a slowdown in the country of china is proving to be short lived. power generation and food processing firms are leading the recovery. and germany's latest exports seems to be recession proof. it's a tradition dating back to the middle ages, but germany's christmas markets are more popular than ever. nbc's andy eckh artson sends this report. >> every december, music rix out across girlny's favorite christmas market. berlin alone hosts more than 80 markets, each with its own character where the sights, sounds and smells of christmas combine to keep your financial crisis at bay.

>> we don't feel a crisis. when you look around here at the christmas market, you meet so different people from germany and it's so popular to come to berlin. christmas season is present season. >> over the past 20 years, germany's christmas markets have become a big attraction and big business. analysts estimate that the german christmas market industry brings in billions of dollars annually. for many small businesses and traditional craftsmen, the markets are the main source of income for the year. makia, one of only ten mammoth ivory carvers in germany has seen his annual turnover grow since 2003. every year, more and more people coming. so, of course, i have more and more business every year. >> these item rather christmas villages draw commerce to

berlin's mainstream retail businesses giving a general boost to pre-christmas shopping. compared to last your, consumer spending in germany is expected to rise by at least 9% this season. whether it is a cup of wine or simply the encounter with old friends, germany's christmas market makes the run up to the holidays truly special. and this german tradition is attracting more and more fans across the globe. >> today, christmas style markets can be found across europe and have made their way to u.s. cities such as charleston, south carolina, to arlington, texas. these german christmas market exports are also enjoying growing popularity among non-germans. >> last year, we probably exceeded 10,000 in our four days. this year, we expect to exceed over 100,000. >> but even as this latest german export success spreads

around the world, there are some who believe there is no substitute for the real thing. >> when you try to bring old tradition to some other countries, i don't know if it works, really works. you can show it, but then it's to show -- here it's not the show. it's real tradition. >> and it's a tradition that in contrast to today's high pace paed lifestyle many find captures the true magic of the season.

welcome back to "worldwide exchange." president obama and congress return to washington today to resume talks on the fiscal cliff. the yen hits a two-year low against the dollar as the new japanese government vow toes battle deflation and weaken the currency. export stocks rise, pushing the nikkei towards it's strongest gain in seven years. and shares in toyota leading the way higher after the japanese automaker settles a class action lawsuit.

we are mostly trading higher this morning as european trade gets back under way after the holiday and after boxing day which i got to experience for the first time. ftse 100 up 0.2%. same with the xetra dax. cac 40 up 0.6% and the ibex 35 up .25%. take a look at the bund wall. both yields moving lower. now it's more differentiated. spain and italy, moving a touch higher, but 5.3 and about 4.5% respectively. forex, this seems to be the place where all the action is lately. thaebl probably going to be a theme of 2010, too. the dollar/yen is at its two-year low for the yen against

the dollar. down about .1%. the euro/dollar up by .3% this morning. the aussie dollar is roughly flat after the shanghai composite closed lower. now, the imf has suggested france should give itself more leeway to meet deficit targets. the fund's mission chief, edward gardener, said the country's target of 3% gdp was less pressing than cutting excess from public finances. the imf warned against more tax hikes, warning these could further restrict french economic growth. and speaking exclusively to nbc, the ceo of alcatel-lucent says he expects french companies to continue to battle head winds. >> we will improve on structural inners, for sure. if you take a european approach, you certainly will see some of the benefits of the structural improvement that we made.

but if you look two feet on the ground, i think 20 is 13 will not be substantially better than 2012. >> what about your business? >> i think what you saw in 2012 was that the u.s. market was very strong. europe was weak. china was very weak. and i think that if you look to 2013, the u.s. will stay strong. i think europe will stay where it was in 2012 and i think that in china, we'll see. >> how are you dealing with the competition from asian telecom equipmentmaker? >> like every other competitor, you have to deal with it. for us, it's innovation. at a time when the squeeze are on, innovation is sometimes on the back burner because price becomes the most important

thing. maybe i don't get the best product available in the market but i get a product that does the job and it's cheaper. if it's becoming a little more tense, that may be in one or two markets the dominating factor. i have to deal with that. so for us it means more agile, faster reaction, reducing costs and dealing with the balance sheet. >> some businesses are now controlled by asian companies like the pc manufacturing. do you think it's the fate of the telecom equipmentmaker? >> i don't agree with that for the first reason that a lot of this is transforming. you picked up the phone to talk. today, you pick up a tablet to do many different things. you get a mixture of the telecom world. so that environment is so inf x

influxed, there are so many different forces coming through to the forefront that you need not just to have your technology side, you need to have your presentation side, you need your customer side. i think this is a market that if you make the right choices could very well flourish in all parts of the world. >> how are you dealing with the price war in france between telecom operators. how is it affecting your business? >> let me take the european perspective. i don't think it's a french problem. i sincerely think if you look to why it is that the u.s. is so ahead in that generation, it's because of the business environment. the business environment. what are you allowed to do? because this is a regulated business. and what is the macroeconomic environment? macro, you can do nothing about. if you look at what they're allowed to do, i'm afraid that we still have a very unfortunate situation in europe, we have 28 regulators.

we have regulation that is based only on basically low pricing and if you compare with the fcc and the u.s., it also has to look to innovation and new investments. that is not the case in europe. you have, therefore, you don't have the incentive to take risks, to take the investment as you have in other parts of the world. >> are you plaming the french regulator for being responsible of the price war? >> blaming is such a typical word. i'm making an analysis. the realities are that if you have to invest as an operator, your investment incentives in the u.s. to take an example are very different than what they are in europe. that's a fact. it's not the blame, it's a fact. if your objective is low price

for consumers, you got exactly what you wanted. but don't expect a lot of activities will start here in europe. >> do you think it's sustainable, this price determination? >> those are two very different worlds. personally, i think if you look to europe, we should have a stimulus for the right incentives been we need cross border merges. we need innovation, home grown innovation. we need to be active for that. we need to make stimulus for that. and that's not with just big companies like ourselves. you need small companies that have the ability to participate. and the third thing that you need to do is you need to bring the competition to where it really matters. and that's in choice. today, the regulator decides my choice. i don't think that's great. >> now, for more on the situation across the eurozone

and specifically in france, allen capper is still with us. >> allen, it seems the market's focus here is on france. >> ohland is undermining his own financing models. and i think what he's doing is he's trying to engineer a shift away from life insurance into other savings vehicles. and my concern is eventually that will come back to bite -- >> so he's trying to engineer this shift. why? >> because if he can get the money to go into savings funds, he can start to spend more on social infrastructure and he'll look good politically. the problem with that strategy is he's taking it out of the buyers of l.a.t.s. >> so if he's effectively removing one natural class of

buyers to channel their savings elsewhere to use for investment, who then bmts the national buyer for french debt? >> it has been foreigners for a while. but when rates on bund start to get up, he will find that, as well. it could break down later in the year and, therefore, getting the budget deficit down alone is not enough. >> does it matter for spain? does it matter for italy? we haven't seen yields move much. >> i think the main reason, they're quite different to spain and italy. and markets ignored them. we're all fairly aware of that financing model. i think at some point next year it will probably break down.

president mohammed morsi has congratulated egyptians for a new constitution. in a tv address to the nation, mr. morsi said changes maybe necessary. the document is too islamist and has rejected the call for dialogue according to some. a super winter storm that pounded the southeast and midwest is now pounding the northeast. the storm has created havoc on roads and at the airports and this as people start returning home after christmas. more than 1800 u.s. flights have been canceled since tuesday. makes the fact that a lot of usair line stocks were at 1 1/2 year highs yesterday. a u.s. federal jury has found martel in patent

violations. carnegie mellon sued marvell in 2009. the company is now hopeful the judge will reverse the verdict, but says lit plan to appeal. marvell shares were down 15% in frankfurt today. you can see investors are not sure they'll be able to appeal that one. shareholders could face high losses, but the so-called frob does not specify just how much the equity would be diluted. it is expected to inject 18 billion euros into bfa before the end of the year. but, wow, down 13% there. when you're talking about 60 cents, it probably doesn't take too much. eu leaders recently agreed on a

european banking union could would make the ecb the single supervisors for european banks. stephane pedrazzi caught up with the former president of the ecb, jean-claude trichet and asked if he was happy with the plan. i think as you'll remember, it was decided because after a certain moment, the idea that the fund could directly recapitalize the banks appears to be in a proper tool to have in the management crisis. there has been a reverse feedback loop. so, of course, if you decide to capitalize directly, you have to survey from the center and now at the national level. i think the decision which has been taken is good one. and, of course, this will be made at the level of the ecb,

taking into account that the ecb is a federal institution and that it would be decentralized also. but it's very important that the decision, the ultimate decision is for all the systemic banks is taken centrally. of course, it's work in progress. you have to have a resolution mechanism that would be workable and convincing and there are other elements including perhaps when time comes to harmonize the scheme. but so it's a big thing. but i have to do that it is one of those concepts that have been decided in 2012 and are very important. >> do you think european banks need more regulation? in france, the government came up with a reform of the banking

sector, although it's far from its original plan. >> i don't know. what was the original plan? and you mentioning the plan of some in the french executive branch. but i have to say what counts, of course, is to apply what has been decided at a global level. and there, of course, we have a global consensus. it has been decided by the g-20 and has to be implemented with the idea that if we lose the level playing field at the global level, it would be very bad for the prosperity of the group for global finance. that's very important. you make an illusion between a particular point, the british, with the vickers report, the u.s. with volcker report and which is entirely operating how

do you separate the banking activities? and the propertory trading. and then you have a green area and the three responses that are given are slightly different. img it makes a lot of discussions and it's good, but i don't think that this is that decisive. everybody recognizes that pure trading should be out of the responsibilities that you have. >> jean-claude trichet there talking with stephane. stick around. ahead on the program, we'll hear from the ceo of advertising publicist. find out what he says is more worrying than the actor's decision to leave the country.

france has recently seen a number of high profile citizens leave the country in what is seen as a response to higher tax rates. gerard depardue specifically

left the country. >> i don't -- information which has been published recently, but gerard is a number of 5,000 people that have left the country. these people are not people with a 11 million euro sally, much less, but people who are the future of the country and this information is real and i think it is more worrying than the departure of gerard or anyone else. >> you pay a lot of taxes in france. do you understand the political if a loss pea fee, which is that richer people should bring a greater contribution especially in difficult moments? >> i have no problem that, yes,

we have to pay more taxes. to a degree, i think the current level is prohibitive and it's a mistake. i think also that one of the issues that we have been facing is not that the government is asking for taxes. it's that during all the campaign and immediately after the campaign and when this government has been in place, it has been all the time not about, please, contribute more, but about the fact that the people who are earning do not deserve to earn what they are earning. and they think that this is still in the mind of the people who have been criticized and blamed because they were making money. the fact that people who are making money have to pay more taxes, i think it is normal. not only in the situation we are in, but what is more normal is

also that the government does his own piece which is to cut spending. >> do you feel that french people have an issue with money and taxes in general? >> i was mentioning that there has been information regarding 5,000 young people who have left and if that nvrlg l information is right, that is clearly an indication that the not only the government, but a lot of people are blaming the medi media .criticizing success. we always had a problem with -- in france. it has been something for

eternity. and they think it is about time to understand that if you want people who can create jobs, who can be successful and to bring more to the community and drive the success of the century, we have to expect 245 some people are making more money than some others. >> then you're asking french people to turn into americans? >> no. i'm asking french people to turn into realans. but there is a collective opinion and there is an individual opinion. the collective opinion is mr. x should not -- more than outrage. the individual opinion is i should earn more. >> the ceo there now. we've been speak, allen capper all morning.

we talked about france and some of the prospects for these countries in the eurozone next year. but is a tactical trade going to be a further rotation out of the core into periphery on the back of all of this or is there, you know, the prospect for reversal here? >> i think the path of least resistance is to be long. the catch is the political situation in italy is going to look fragile. at some point, the market will realize the spanish growth model could look fragile, indeal. it's too early to say. >> is it the fundamentalists that are the catalyst? let's say, for example, that they realize the spanish situation is untenable. >> the fundamentals now look

similar to the way they did a year ago. the key issue is what i mean by blow youp. in 2012, that was quite serious. my sense is because the bonds and the equity is now in domestic hands rather than foreign hands where the market takes a dive, that dive will be a much smaller magnitude than in the past. so as a result, i am concerned about the periphery. but do you think we're going to see widen out dramatically? absolutely not. >> and xikly, financials versus nonfinancial financials, where do you stand there? >> i struggle to recommend them further beyond these levels. i sense in some ways as we go into next year, investors will want to diversify portfolios. >> a credit picker's market. sounds like it, anyway. allen capper, thank you so much.

still to come on the program, it's wheels up for air force one as president obama jets back to washington early from his hawaiian holiday. the we expect any real progress to be made on the fiscal cliff?

welcome back to "worldwide exchange." i'm kelly evans. these are your headlines from around the world.

president obama and congress return to work today with little progress seen on a deal to avoid the fiscal cliff. meanwhile, the government starts taking steps to buy more time before the u.s. hits the debt ceiling. the yen is hitting a two-year low against the dollar as the new japanese battle vows to lower deflation. exports rise pushing the nikkei to its strongest gain in seven years. and shares in toyota trading higher after the japanese carmaker settles a major u.s. class action lawsuit. it said the $1 billion payment is already priced in. treasury secretary tim geithner says the u.s. will hit the $16.4 trillion debt ceiling on monday. in a letter to congressional leaders, geithner says treasury will begin taking steps to save the government about $200

billion and hopefully delay a potential default until sometime in february. geithner says it's harder to predict the time frame because of the ongoing fiscal cliff talks. and among the measures treasury will take include halting investments in the federal government's employee pension fund. not necessarily great moves there. president obama arrives back in washington today after cutting short his christmas vacation in hawaii. congress is back in town, but aides say little progress was made over the holiday toes avoid the fiscal cliff and no talks have been set. the house has no plans to reconvene. last week, house speaker john boehner said it was up to senate democrats to come up with a plan. greg joins us now for the very latest. did you get any rest over christmas here? because it sounds like there was

no progress made on fiscal cliff talks. >> yeah. thankfully, there was virtually nothing going on in washington. so it was an opportunity for all of us to catch up on our sleep here. >> i wonder, too, when we've looked towards the calendar, we have today, tomorrow, i guess monday being the 31st. what prospect do you expect of us hearing a deal before then. >> well, i certainly expect that now that obama is back in town he'll be trying to broker some sort of a deal with john boehner, the house of representatives, and there will be talks among democrats trying to explore whether they can put forth a new scaled down deal that could get past both the republican minority in the senate and get a vote on the floor of the house of representatives. and i think what the markets have to realize is that if the deal were to pass between now and the end of the year, it would first of all be a much more scaled down version of the grand bargain we've all been hoping for. at most, you will get an extension for the alternative

minimum tax, but you would not get a serious delay in the so-called sequester, the automatic spending cuts of $100 billion a year, and most important, you will not get relief on a debt ceiling which potentially sets us up for another big fight, much like we saw in the summer of 2000. >> and we know this fight is a difficult one for the gop. they've dug in their heels. this is an issue that they've almost made part of their platform. how much does this complicate talks beyond what we've seen given that this has to address as happening at the end of the year and quickly keep us from hitting the debt ceiling? >> it complicates things now. obama has been insisting that any deal should include a significant fix to the debt ceiling so the government doesn't have to deal with that threat of default for at least another year or two. even the democrats are saying that does not appear something they can get done at least in the next few days. so it means at a minimum we have

another several weeks and uncertainty. and i think for markets, they have to start grappling with the idea that even if we go over the fiscal cliff and people start negotiating more intensively, how realistic is that if they couldn't get the deal done in the last six weeks and that they will get it done in the next six weeks? we're looking at a lot of market uncertainty. >> it's clear, too, that it takes that pressure, whether it's pressure in terms of the calendar or form of the markets that takes lawmakers to compromise. we've had calendar pressure. we haven't had as much market pressure maybe because we've had a view that it's going to be okay. but we're starting to hear from guests on the program, allen capper saying, look, as it appears, we're not going to get what we hoped for. it could be a bit of an ugly trade come january. >> you know, i have to agree with that. i'm surprised that we haven't seen more of that sentiment showing up in markets to date. maybe because it's that thin

holiday period. but even if you go back to august of 2011 when we came so close to a technical default on federal obligations win it didn't find its way to the markets until a few days before the hard deadline. in this case, the market is not as hard as it was in 2011 because, for example, you do not suddenly stop paying all the bills on january 3rd. even the sequester takes time to take effect. but that said, it mace take time to creep up on markets, especially if when congress is back in session in january you don't see any precipitous sign of them moving towards a deal. >> then i don't think we're going to cross our fingers for that one. greg, stick around. we'll have plenty more with greg in just a bit. in the meantime, we want to give you a sense of how markets are trading. they were open in the u.s. and trading weak her for the most part this morning. looks like we could get a rebound. similar small gains seen for the

nasdaq and s&p 500. asian markets, a mixed session. we are almost back to the patterns that we saw about a month ago where the shanghai was lagging the market. that was the case down, do down .6%. back towards 2200 despite stronger figures on chinese profitability. meanwhile, the nikkei leading the market up higher up .9% on hopes that the japanese government will pursue more aggressive markets. >> european markets, still sitting higher. the ftse mib up .25%. the ibex has fallen back and is now almost flat. the xetra dax holding abo about .25%. and one of the best outperformers to be in in 2012, looking to finish the year on a strong note. the ftse 100 is higher, too. bonds have been an interesting case this morning because we have seen rotation out of the periphery and into the core. generally speaking, we're not talking about much movement. italy and spain, we're seeing

the ten year at 4.5%. spain, 5.29 the%. yesterday we saw a bit of a comeback, but it's forex where we're seeing moves. the euro/dollar adding .3%. so 1.327 68 is the level there. the dollar/yen rising closer to that 86 level this morning. here is a quick peek at what's on the agenda in the u.s. weekly jobless claims at 8:30 eastern. at 10:00 a.m., we'll get december consumer confidence. this is one to watch. analysts are looking for a reading of about 70, down four points from last month. at 10:00, it's new home sales. now, the latest report says this holiday season has been the worst for u.s. retailers since

the beginning of the financial crisis. we'll walk through those figures and the impact for retailers when we come back.

there are frustrations in markets that politicians haven't taken advantage of the breathing space that the extraordinary measures have afforded them. that view was shared by former ecb chief jean-claude trichet who has been speaking exclusively to cnbc. >> it's not new, of course, that the central banks all over the world in all advanced economies have embarked on nonstandard measures that are very bold, obviously, and are all driving the balance sheet of the central banks to a much, much higher size. and it's true in japan, true in the u.s., true in the uk, true that the first observation in all cases, of course, it is justified only if it is exactly appropriate to the disruption of markets which the central banks have to counter. so i will not say that the government and the parliament

have done nothing. but, of course, we always would like that they would go more actively in the direction of reinforcing their own adjustments and reinforcing confidence which is essential for growth and job creation and also to -- in the case of europe -- the european fiscal and economic governments. which is the major, major problem. but, again, i would say in this domain, too, we are going in the right direction. it would be naive to see something is being done, but it's also very important to continue to go very actively in this direction. 2013 we'll see elections in germany and in italy. do you think it could lead to some sort of political stand by or quite the opposite, it could speed up the political reshaping in the eurozone?

>> first of all, i think that the situation in all countries, you ever responsibility toes be taken and i am not of the opinion that there are divisions in the public opinion in any country in europe that would translate in major changes in the policies pursued. so i am confident that this historical endeavorer which is reinforcing the european union, reinforcing government, fiscal and economic governments will go on and until now, all elections in all countries and we have 17 democracies so you have perchl elections have confirmed the determination of the european to go on and to pursue their, again, historical endeavor. this is something which is very

important. ten from new york, ten from, i would say, hong kong and shanghai, in from singapore. you have a difficulty to understand that underlying you have a historical endeavor. and so it's difficult to make up your mind on the basis of only what is apparent because you have only to price in the very, very powerful underlying historical endeavor. >> if you're just joining us here on "worldwide exchange," these are your headlines. president obama and congress return to work today with little progress seen on a deal to avoid the fiscal cliff. the yen hits a two-year low against the dollar as the new japanese government battles deflation and a weakening currency. and shares in toyota are higher after the company settles a class actions lawsuit in the u.s. for $1 billion. and here is a look at today's

other top stories. starbucks is hoping the power of caffeine will help bring congress together to avoid a deal on the fiscal cliff. the ceo is earning to write "come together" on cups today. schultz says, quote, we're paying attention. we're greatly disappointed in what's going on and we deserve better. of course, whether congress gets that message is another mart. but the concentration of starbucks stores near capitol hill is relatively low. u.s. stocks slid wednesday on the back of reports that this holiday season might have been the worst for retailers since the beginning of the financial crisis. you can see shares leading the way lower down by .3.75%. holiday sales rose less than 1% this year compared to the 2% increase in 2011. greg, if the u.s. economics et

tore is still with us. should we finger the fiscal cliff here for being the english that stole christmas or is there something else going on? >> it might be the fiscal cliff. one of the interesting trends we've seen in the last few months was business spending was taking a hit as companies scaled back their expansion plans, worried that we might be heading into ae investigation in 2013 because of the fiscal cliff. but we didn't see similar behavior on the part of consumers. what you're seeing now might be a sign that consumers have, in fact, begun to react to some of the evidence in the air, that things will be rough in the coming year. so i think what we see from the consumer confidence numbers out later today in the united states will be interesting in that regard. now, the one word of caution i would put in here is a lot of these informal retail surveys such as by the shopping center's association, they often don't line up well with the official numbers that we get from the u.s. government. >> so true. we also can look at the difference and say, well, maybe

holiday discretionary spending wasn't as strong, but retail spending generally held up okay. maybe not the best sign tore some of the retailers, back up not a reason to completely lose faith in the u.s. consumer. we should point out this disparity we've seen where capital spending, goods for new capital orders have been weak and retail sales have been relatively strong. labor income has held up okay. frankly, when you look at 2013, the outlook for that to continue looks recently good. >> well, sure. and the other thing we'll look forward to is the number on jobless claims. they were back to their prehurricane level suggesting that the labor market hasn't fallen out of bed. there will be an interesting announcement coming out of the irs sometime between now and the end of the year which will be very important. they're going to give guidance to employers on what will be the tax withholding rates for 2013. under the laws, those withholding rates are supposed to go up because, as you know, all thoughts tax cuts that were

passed over a decade ago were supposed to expire. and the irs is basically on the sideline waiting to see what happens on the hill between them and the president to see if, in fact, there's a reason to tell the current employers, hold on, there will be a freeze on those rates. if, in fact, they have to go to the new guidance, consumers will start to feel very early the hit to their paychecks of having gone over the fiscal cliff, even if there's auto deal that retroactively drags us back over the top of the cliff. >> it's an interesting point. greg, thank you so much. such a mess. it was better news at the box office lately. hollywood is on track to post an all-time box office record this year. film lovers have flocked the theaters to see christmas day performances of les miserables

and "unchanged." stick around. still to come on the show, the summer olympics and u.s. election made to 2012 a bumper user for advertisers. will that continue in 2013? we'll ask the ceo of publicis next. i feel so alone. but you're not alone. i knew you'd come. like i could stay away. you know i can't do this without you. you'll never have to. you're always there for me. shh! i'll get you a rental car. i could also use an umbrella. fall in love with progressive's claims service.

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>> european markets are getting back the trades today. u.s. futures are expected to add about 10 points to the open. with the exception of the nasdaq trying to post a rally there. as we look into the trading session across europe, we're now seeing the ibex turn negative. it has given up its earlier positive move. the mib holing up. the xetra dax and ftse 100 are a little higher. 2012 was a big year for advertisers. how will 2013 shape up? >> the information we have in hand today show an improvement over the growth compared to

2012. last year, we had also a very good forecast at the beginning of the year and the reality had an different. so i do hope that the forecast that we have will become reality at the end of the year. and if this is happening, clearly, the industry in general will have a good year because the media had been suffering. price has been suffering a lot in 2012. media has been suffering a lot and i do hope that it will be better. >> do you hope that she will

avoid an issue like you had last year with the market deterioration? >> it's an accident that the industry had. as you know, all the ceos have mention dollars that it has been a kind of cliff in the beginning of september because people were extremely worried about what could be the end of the year. and it has not lasted. it has been only for the months of september. when there is an accident, you cannot predict it. otherwise, you avoid it. and it has been an accident of the industry and people were clearly extremely worried about the general me. if we look at our numbers, we had a formidable month of

october. the month of november is in line with our own expectations. we are waiting for the final numbers for december. so all in all, we will have a decent 2012 and we will deliver on our own forecast. so we are quite satisfied -- i don't like the word satisfied because it can lead to complacency. but we are quite happy with what we have today in hand for 2012. 2013 is another story. rmalopening up for a new phase, a narrow growth of margin and growth of our revenues. we expect to outperform the

markets and to slightly improve our margin because we have a plan to improve the margin quite strongly. so we have good expectations for 2013. >> where do you think growth will come from in 2013? i assume it will come from emerge i emerging and digital. >> we are expecting growth coming from the u.s. and from the u.s. many proposition in digital. in u.s., we probably weather the crisis and the fact that the market will be negative thanks to the fact that we have a nice share in digital and most of the growth will come from the emerging market and digital. that is clear. still to come on the program, it's wheels up for air force one as president obama jets back to washington early

from his hawaiian holiday. but can any progress be made on the fiscal cliff? doubt it, but we'll see next.

welcome back to "worldwide exchange." i'm kelly evans.

ross westgate is away. these are your headlines from around the world. president obama and congress return to work today with little progress seen on the deal to avoid the fiscal cliff while the government starts taking steps to buy more time before the u.s. hits the debt ceiling. the yen hits a two-year low against the dollar as the new japanese government vows to battle deflation and weaken the currency. export stocks rise pushing the nikkei towards it's strongest gain in seven years. and toyota moves higher after the car dealer settles a class action lawsuit. analysts say the $1 billion payment is already priced in. >> it was a pretty quiet trading session in the u.s. yesterday. retail stocks were one of the market's worst performers. we were just discussing the outlook for holiday sales coming in weaker than first expect. today, trying to cover some of

those losses. similar small gains seen for the s&p. the nasdaq was a little lower the last time we checked in. roughly flat now. overnight, cnbc ftse global 300 gives up the trade, we're up about .25%. the nikkei particularly a strong one. likely to be a theme for 2013. the shanghai composite, underperforming. the ftse 1100, .2% in the positive. the cac 40 having a strong day, up about .5%. the ibex 35 is now negative. it did open higher, but now shedding about .4%. now, president obama is due to arrive back in washington today after cutting short his christmas vacation in hawaii. congress is also back in town, but aides say little progress was made over the holiday on any

potential deal to avoid if major cliff. john harwood sent this report from washington. >> just a few days of 2013. i want to bring you up to date on developments. first of all, the treasury has informed the united states senate that the government will hit its statutory debt ceiling on december 31st, new year's eve. that's part of an effort to pressure the congress to act to raise the debt ceiling. that is not directly implicated in the fiscal cliff talks, but it's part of the larger issue of debt and deficit that congress has to deal with. secondly, house run leaders conferred and sent a letter to democrats to say it is up to the senate to act. the house has already acted on a bill to avert the fiscal cliff. democrats have no intention of taking up that house bill, which would extend all of the tax cuts into 2013. the approximated says he's not going to do that.

plus a senate democrat leader told me there is a possibility of extending tax cuts for those under $250 thoid, but turning off the automatic across the board budget cuts. that will be a temporary measure. and finally, president obama has returned from his vacation in hawaii to try to kick start those talks. but the white house officials tell me there are no signs of progress yet. they have to hope that when members come back to washington on the 27th, that is thursday wblg that both the president, democrats in the senate, republicans in the senate and then both parties in the house can come together on at least a short-term deal. back to you. >> a short-term deal. joining us now is tim stanley, a u.s. historian at oxford university. welcome. >> good morning. >> we've been following this together for the last several

months. how do you feel about the prospects of a deal before monday? >> not so bad about that, actually. last week i felt quite good about a deal happening. >> what changed? >> it turned out that boehner didn't have the votes, a mistake i made, i think, and some other people made, too. not thinking enough about the hard core conservative republicans who were not going to vote for any kind of tax increase, either because they didn't think they could sell it. so we're now moving over this new phase. we have a couple of days in which some say it could happen. it's possible that obama will i have to rely upon the votes of retiring americans, maybe a mini deal will be done by that. but increasingly, it looks like we're heading towards going over the fiscal cliff, which isn't the end of the universe. but i was reading a piece this morning saying they can vote not

to raise taxes, but lower them less. >> but they can still say to their constituents, i did not raise taxes. >> but i wonder what other impact there will be if they go over the cliff, so to speak? >> well, right now, we don't know what affect this is going to have on the market, there is a ceiling issue. >> the u.s. is kind of almost rules driven. we create these rules and create problems for ourselves and have to try to get around them. why, is there anything to like about this system which we're rightly limiting at the moment? >> i suppose you could argue that it's politically sensitive. it's sensitive to the election. rather than one consistent policy being followed, it reacts much better. there's a reason why obama is leading this thing right now. he won the election. he now has the right, morally and politically to force his

version of a deal upon people. we also have to consider the dynamics of congress. you know, boehner is going to be coming up to a speaker election january 3rd. all it will require is 17 republicans to overthrow him if they don't support him. that is a tiny number. you could argue this is inherently unstable. you could argue that maybe we're going to get it. some talk about bringing him an outside speaker like john huntsman. and i don't see that happening. but you get a sense of anything could happen in this system. >> and maybe it's a benefit. maybe in the long-term, but certainly right now there does seem to be a sense that it is a small group of people holding the rest of the process hostage. >> oh, yes. i'm trying to find something good to say about something. because the alternative is china, you know? i'd rather have a -- >> is that the case, though? is there not an alternative that you see and other examples as you look whether it's to europe, here in the uk? >> right.

right. and people have been saying right now that america needs to do what britain has been doing. and maybe there's a case for that. but nonetheless, if britain has a parliamentary system, we have a very different kind of political system. so america isn't going to rewrite itself just to adapt to this particular political situation. but look, something has changed in the politics of america. right now, george h.w. bush is very ill. he may pass on in the next couple of weeks or so. when he does, that will be the passing of the last truly national president. look at how he was elected in 1998. he won traditionally democratic as well as republican states. he was a moderate guy, a war hero. he was respected by people across the aisle. that was the last time in history you'll see that. >> that it is, president obama got a lot of votes in 2008 by a lot of votes that were not

just -- >> that is so. but clinton did quite well but only because ross perot was running. very complicated. in terms of it being a national figure, someone reaching across the aisle, you haven't seen that. one of the things that h.w. did while he was in office, he he cut a budget deal raising some taxes with some republican support. >> and that's what made his legacy as a one-term president. >> and that's what killed him. but he was at that turning point when conservatives were no longer willing to accept that. conservatives didn't complain so much earn him. so things were changing the the point being we've moved on from that period in which you can have that sen trit government leadership. >> views have changed. it does look like we could be headed over the cliff. we don't have much time left. we'll see retroactively if that allows for a deal to be reached. >> yes. >> tim stanley, going through

all of this with us. an author, as well. >> merry christmas. >> and to you. now, former u.s. president is. >> intensive care at a houston hospital. the 88-year-old was moved to the icu sunday. president obama has been in the october due to a cough. his doctors remain cautiously optimistic about his condition. samsung is now taking on issues with shoes in the u.s.

welcome back. we're keeping an eye on the strong winter storm that pounded the midwest and southeast and is now thrashing the northeast. it knocked out power to homes in days, a lot of them in arkansas. it has created havoc on the roads and at airports. flightaware.com says more than 1500 flights have been canceled since tuesday. reynolds wolf joins us now. reynolds, my family is headed

back in a couple of days. are they going to make it in? >> oh, my goodness. it's going to be a tough time for people in the northeast. this storm, affecting so many millions of americans. today we'll have wind, rain and snow. buffalo could see up to a fought of snow. southeast, cool and try for the most part. snow possible in the sierra nevada. in parts of the pacific northwest, you might see rain in the valleys, but high aloft it's mainly going to be snow. in terms of air travel, as you might imagine, there will be backups for you. especially in spots like new york. the biggest issue, not really the rain or the snow. but the wind will be the big troubling factor. same story for you in boston. portland, maine, will have some backups and also buffalo, new york. you might have delays not only at the airport but many of the

roads are in horrendous shape because of the heavy lake-effect snowfall. your headlines, president obama and congress return to work today with little progress seen on a deal to avoid the fiscal cliff. the yen hits a two-year low against the dollar as the japanese government battles to weaken deflation and the currency. and shares in toyota end higher after the u.s. settles a class action lawsuit for $1 billion. and here is a look at today's other top stories. new japanese prime minister shinzo abe has vowed to battle deflation in the strong yen. the 58-year-old has promised aaggressive monetary easying by the bank of japan. meanwhile, the bank of japan was issues. one option considered was an

open-ended commitment to buy ass assets. customers brought the case against toyota, claiming certain models accelerated unintention equally. 16 million vehicles are covered by this action, including popular models like the camry and toyota. toyota shares were rallying on the news, up about 1.3% in trade today. the season of good wills has seemed to pass tech firms by. sang sung is seeking the bail of exports of ericsson products. the action follows a suit and similar blames just keep going. coming you, the latest u.s. consumer data is heading in for the day. we'll take a check off what the.

a u.s. federal jurl jury found marvell infringed on several patents bhi carnegie mellon. carnegie mellon sued marvell in 2009 of patents. the company hopes the judge will r peel the verdict. shares were down on marvell this morning as investors worry about the future of that case. >> raj rajaratnam has agreed to pay $1.5 million in a civil suit filed by the s.e.c.

rajaratnam was convicted of insider trading fraud. he's currently serving an 11-year prison sentence. rajaratnam has paid more than $6 million in criminal fines. on the agenda in the u.s. today, 8:30, jobless claims. at 10:00, consumer confidence numbers are out. then at 10:00, november new home sales and these are expected to gain about 2% to an annual rate of $375,000. u.s. futures are moving higher this morning. not much action. it's been a very quiet week. we did see markets trade weaker yesterday in particular on concern over the health of the holiday season. also a concern, the fiscal cliff, of course and, oh, yes, the debt ceiling, too. treasury secretary tim geithner says the u.s. will hit the $16.4

debt ceiling on monday. in a letter to congressional leaders, geithner says treasury will take steps to save the government $210 in order to delay a potential default until sometime in february. geithner says it's difficult to predict a time frame. among the measures treasury will take, helping investments in the federal government employee pension fund. that might create a few more problems down the road. now, president obama is arriving back in washington today after cutting short his christmas vacation in hawaii. congress is back in town, but aides say little progress was made over the holiday on a potential deal to avoid the fiscal cliff. the senate is due in session today, but the house has no plans to reconseen. last week, house speaker john boehner said it was up to democrats that would likely freeze spending and extend

unemployment benefits. craig, so much for investors to consider if they are at work this week. housing in particular, a strong point, does that do enough to offset the worries we've seen about retail sales weakness? >> no, i don't think so it does. and good morning. housing has been very strong. the data has been very strong over the past several months, really, a year. housing starts are up 20% year over year. building permits are up 30% year over year. so, really, the existing sales are up 11% and mortgage rates are going on 350 now. so the housing numbers, the housing data we go is going to be very strong. it's going to be hard for any housing data to offset what is going on with the fiscal cliff talks and the disappointing expectations for disappointing retail sales.

>> and we get consumer confidence again today. we were talking with craig earlier who made the point that others have that this report isn't the be all end all when it comes to holiday spend. retail sales generally speaking have held up better. consumer spending has held up okay. in your view, what is going on with the u.s. consumer? again, we've seen the strength in housing, but we're not seeing it on the holiday side, necessarily. >> right. the big issue is weak dispoiseble income growth. it's simply we haven't made any traction there. we've averaged 2%. if you look back over the past three months, real dispostble income growth has been negative on a three month over three-month basis. so the bottom line is confidence can get better. we can see better data in housing. we can see better auto sales. but if we don't have better income growth, it will be hard for consumers to continue to

spend. >> if you look at the claims figures we'll get later today, the payroll data has been deepened. so if we get, for example, this move lower continuing into next year, that should do a lot for the disposable spending power for consumers. >> it should. payroll growth has averaged 138,000 per month, so that's just enough to keep up with population growth. we don't see net population growing ongoing. if gas prices continue to trend lower, that will be a beacon of hope. but if we do go over the fiscal cliff, the net impact to u.s. households, if we have the conclusion of the payroll tax cut which right now isn't even

on the table in the talks, that is the equivalent of $1.26 increase in gasoline prices overnight. if you have the expiration of the bush tax cuts, on average, that's the equivalent of $2.21 increase on gas prices overnight. that gives you an idea of how much of a drag the expiration of the tax cuts will be on consumers. >> craig, i love that. if you want the implication of these policies, put them in gallon for gas terms. $1.26 for the payroll tax hike. >> that's right. >> craig, we appreciate that. we hope the rest of the office joins us shortly. otherwise, starbucks is hoping congress will come to a deal. the ceo is urging workers in the d.c. area to write "come

together" on cups starting today when president obama and lawmakers should return from the christmas holiday. schultz says we're paying attention and we deserve better. the concentration of starbucks stores on capitol hill is actually relatively low. let's take a look at u.s. futures. they are drifting just a little higher. we only have a few trading days left to go in the year. european markets are moving higher for the most part, although the ibex does continue to be an underperformer. there are concerns about funding, that is, the valuation of bankia, before the spanish bank is set to receive about $18 billion euros in relief aid. and take a look at the xetra dax. they're adding .3% today as it continues its extraordinary run in 2012, up nearly 30%. it's been one of the top performing assets in the world. and we'll leave with a look at what is happening in currencies because the yen continues to be a big story and will continue to be a big theme

into 2013. the yen was another -- or the nikkei, i should say, was up another .9% in asian trade. so in a week that was otherwise pretty quiet with not a lot of action going on, this is certainly one space to watch. that's it for today's show. i'm kelly echs. "squawk box" is up next. i'll be back here tomorrow. louisa bojesen will hopefully be joining and then maybe sometime next week or the week after ross and i will be back together. hope everyone had a great holiday. [ male announcer ] this december, remember -- you can stay in and like something... or you can get out there and actually like something. the lexus december to remember sales event is on. this is the pursuit of perfection.

. morning. the day's top stories, president obama and senate lawyermakers return to washington. just days left to hammer o